JOHANNESBURG – The Prudential Authority said it could be a while before the impact of the tariffs on financial stability was felt.
US President Donald Trump has threatened to unleash a fresh wave of tariffs on countries he says have an unfair trade balance with the world superpower.
On Wednesday, Trump’s administration announced a possible 50% levy on Brazilian products entering the US.
CEO of the Prudential Authority and South African Reserve Bank deputy governor, Fundi Tshazibana, weighed in on the implications of Trump’s erratic trade strategy.
If the Trump administration goes ahead with the latest tariffs, South Africa faces a 30% tax on its exports to that country.
While it’s unclear if there would be any product exemptions, the move could bring the agricultural industry to its knees.
Tshazibana explained: “Because there’s so much unknown about how these tariffs are going to be executed, even the direct impact on the real economy is hard to estimate.”
She said with that in mind, the financial system’s impact was even harder to quantify.
“What I can tell you, though, is that in the financial system or in financial markets in general, having a level of policy uncertainty impacts investor confidence.”
The Prudential Authority said that the lower investor confidence could put pressure on market valuations but that it could run scenarios when the picture was clearer.